Donegal Group Inc (NASDAQ:DGICB) Q1 2019 Earnings Conference Call - Final Transcript

Apr 30, 2019 • 11:00 am ET


Donegal Group Inc (NASDAQ:DGICB) Q1 2019 Earnings Conference Call - Final Transcript


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Good morning. My name is Cheryl, and I will be your conference operator today. At this time, I would like to welcome everyone to the Donegal Group Inc. Q1 2019 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. (Operator Instructions) Thank you.

Jeff Miller, Chief Financial Officer, you may begin your conference.

Jeffrey Miller

Thank you very much. Good morning and welcome to the Donegal Group conference call for the first quarter ended March 31, 2019. Yesterday afternoon we issued a news release outlining our quarterly results. For a copy of that release, please visit the Investor Relations section of our website at

In today's call, Kevin Burke, President and Chief Executive Officer, will discuss a number of our recent developments and update you on our business strategy and initiatives. I'll then follow his comments with a brief overview of our quarterly financial details. Following our prepared comments, we will open the line for any questions you might have.

Before we get started, you should be aware that our commentary today includes forward-looking statements that involve a number of risks and uncertainties. We described forward-looking statements in our news release and we provided further information about risk factors that could cause actual results to differ materially from those we project in the forward-looking statements in the report on Form 10-K that we submitted to the SEC. You can access our Form 10-K through the Investor section of our website under the SEC filings link.

We use certain non-GAAP financial measures to analyze our business results and refer you to the reconciliation of non-GAAP information that we included in the news release we issued yesterday.

With that, I'll turn it over to Kevin.

Kevin Burke

Thanks, Jeff. And welcome, everyone. We were pleased that the initiatives we implemented throughout 2018 contributed to favorable financial and operating results for the first quarter for Donegal. The improvement in our results was driven by a number of different factors. The most notable being the strong underwriting performance of our commercial lines business segment, which I'll detail in a moment.

In addition, there were a number of unusual elements during the first quarter, which while all positive, did greatly impact our financial results and factor into comparisons to the prior year first quarter. First, we reported $6 million in net investment gains related to the impact of the first quarter equity market rebound from the late December decline in stock prices. Second, we completed the sale of Donegal Financial Services Corporation during the first quarter, which added $12.7 million to net investment and contributed significantly to our net income. Third, weather related losses and large fire and casualty losses were lower than our historical averages for the first quarter of the year. And finally, our comparative 2018 first quarter results reflected more severe weather and the impact of significant reserves strengthening actions we took in our automobile lines of business.

The combination